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What is automated customer account transfer service (ACATS)?

The Automated Customer Account Transfer Service (ACATS) is a system that facilitates the transfer of securities and assets between different financial institutions or brokerage firms on behalf of customers. It provides a standardized and automated process for transferring customer accounts, holdings, and positions from one firm to another, streamlining the account transfer process.

Here are key points to understand about the Automated Customer Account Transfer Service (ACATS):

1. Account Transfers: ACATS enables customers to transfer their investment accounts, including stocks, bonds, mutual funds, and other securities, from one brokerage firm to another. It allows customers to consolidate their holdings, change service providers, or take advantage of better investment opportunities.

2. Standardized Process: ACATS establishes a standardized and automated process for transferring accounts, which simplifies the administrative burden for both customers and financial institutions. It replaces the manual and paper-intensive methods previously used for account transfers.

3. Participant Firms: ACATS is utilized by participating financial institutions, including brokerage firms, banks, and other financial intermediaries. These firms adhere to the rules and guidelines established by the National Securities Clearing Corporation (NSCC) and the Depository Trust & Clearing Corporation (DTCC), which operate the ACATS system.

4. Transfer Instructions: To initiate an account transfer through ACATS, the customer submits a transfer request to the receiving firm. The request includes details of the customer’s existing account and holdings, as well as the desired account at the receiving firm.

5. Electronic Processing: ACATS facilitates the electronic transmission of transfer instructions and related data between the transferring and receiving firms. It automates the validation, verification, and reconciliation processes to ensure accuracy and efficiency in the account transfer.

6. Transfer Timeline: The ACATS system establishes specific timelines for completing account transfers. The transfer process typically takes several business days, with the exact timeline varying based on the complexity of the transfer, the involved financial institutions, and any additional factors, such as the need to liquidate certain assets before the transfer.

7. Asset Transfers: ACATS not only transfers customer accounts but also facilitates the movement of associated assets. It includes the transfer of securities, cash balances, positions, and other relevant assets held within the customer’s account.

8. Account Information: During the transfer process, customer account information, such as account numbers, positions, cost basis, and other relevant data, is shared between the transferring and receiving firms to ensure accurate and complete account migration.

9. Regulatory Compliance: ACATS complies with regulatory requirements, including those established by the Securities and Exchange Commission (SEC) and self-regulatory organizations such as the Financial Industry Regulatory Authority (FINRA). Compliance measures help protect customer assets and ensure a smooth and secure transfer process.

ACATS simplifies and expedites the account transfer process for customers and financial institutions, providing a standardized and efficient method for transferring investment accounts and assets. By automating the process, ACATS reduces administrative burdens, minimizes errors, and enhances the overall customer experience when changing service providers or consolidating investment holdings.